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Capital Group New Perspective Fund (LUX)

Taking a new perspective on global investing, for fifty years

From 1 December 2023 the Capital Group New Perspective Fund (LUX) is classified as an Article 8 fund under the EU’s Sustainable Finance Disclosure Regulation (SFDR).

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        Risk Considerations

        Risk factors you should consider before investing:

        • This material is not intended to provide investment advice or be considered a personal recommendation.
        • The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment.
        • Past results are not a guide to future results.
        • If the currency in which you invest strengthens against the currency in which the underlying investments of the fund are made, the value of your investment will decrease. Currency hedging seeks to limit this, but there is no guarantee that hedging will be totally successful.
        • The Prospectus – together with any locally required offering documentation – set out risks, which, depending on the fund, may include risks associated with investing in fixed income, derivatives, emerging markets and/or high-yield securities; emerging markets are volatile and may suffer from liquidity problems.
        • Some funds may invest in financial derivative instruments for investment purposes, hedging and/or efficient portfolio management.

         

         

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        Fund centre | Capital Group

        Sustainability-related disclosures

        Statement on principal adverse impacts of investment decisions on sustainability factors

        The sustainability-related disclosures are meant to be revised as necessary from time to time to capture any changes or reviews. The capitalized terms are used in accordance with the definitions and references outlined in Capital International Fund Prospectus.

        The below section “Summary” was prepared in English and is being translated to other official languages of the European Economic Area. In case of any inconsistency(ies) or conflict(s) between the different versions of this section “Summary”, the English language version shall prevail.

        Date

        This information is valid as of 01 December 2023.

        Summary

        This Fund promotes environmental or social characteristics, but does not have as its objective sustainable investment.

        The Fund aims to manage a carbon footprint (weighted average carbon intensity (“WACI”)) for its investments in corporate issuers that is generally at least 30% lower than MSCI ACWI index. While this Fund is actively managed and without any reference or constraints to a reference index concerning the composition of the portfolio of the Fund (within the limits of the relevant specific investment objective and policy), the Fund is using this index to monitor the investment’s carbon emission. The Investment Adviser relies on third party data to carry out ongoing monitoring of the WACI at the Fund level, and may reduce or eliminate exposures to certain companies as necessary.

        To promote environmental and social characteristics the Investment Advisor applies ESG and norms-based screening with respect to certain sectors such as weapons. To support this screening, the Investment Adviser relies on third party provider(s) who identify an issuer’s participation in or the revenue which they derive from activities that are inconsistent with the ESG and norms-based screens. In the event that exclusions cannot be verified through the third-party provider(s), or if the Investment Adviser believes that third-party data and/or assessment is incomplete or inaccurate, the Investment Adviser will aim to identify business involvement activities through its own assessment.

        The Negative Screening Policy applied by the Investment Adviser can be found on:

        https://www.capitalgroup.com/content/dam/cgc/tenants/eacg/negative-screening-policy.pdf 

        The Fund promotes, among other characteristics, environmental and social characteristics, provided that the companies in which investments are made follow good governance practices. Good governance practices are evaluated as part of the Investment Adviser’s ESG integration process. Such practices are assessed through a monitoring process. Where relevant, fundamental analysis of a range of governance metrics that cover areas such as auditing practices, board composition and executive compensation, among others, is also conducted.

        Information on Capital Group’s corporate governance principles can be also found in its Proxy Voting Procedures and Principles. The ESG Policy Statement provides additional detail on Capital Group’s views on specific ESG issues, including ethical conduct, disclosures and corporate governance, available on:

        https://www.capitalgroup.com/content/dam/cgc/tenants/eacg/esg/files/esg-policy-statement(en).pdf

        The Fund’s carbon constraint does not apply to the entire portfolio, and will apply only to corporate issuers that have carbon emissions data available (reported or estimated). The Capital Group’s Negative Screening Policy will apply to the entire portfolio, with the exception of cash, cash equivalents and money market funds. Index derivatives that are used for hedging and/or investment purposes will not be assessed on a look–through basis. Therefore, there may be circumstances where the Fund may gain indirect exposure to an issuer involved in the excluded categories (through, including but not limited to, derivatives and instrument that gives exposure to an index). Single-name derivatives will need to be compliant with the Negative Screening Policy. The Investment Adviser will ensure that collateral received is aligned with the policy.

        The planned asset allocation is monitored continuously and evaluated on a yearly basis.

        To measure the attainment of the environmental and/or social characteristics promoted, the Fund considers the following principal adverse impacts (PAIs) on sustainability factors:

        - Principal Adverse Impact 1 on greenhouse gas emissions.

        - Principal Adverse Impact 4 on exposure to companies active in the fossil fuel sector.

        - Principal Adverse Impact 10 on United Nations Global Compact violators.

        - Principal Adverse Impact 14 on controversial weapons.

        Exclusions are primarily identified through a third-party provider, MSCI ESG Business Involvement Screening Research (“MSCI ESG”). Other data points include the MSCI United Nations Global Compact violators and MSCI Carbon Footprint Metrics.

        The methodology and sources relating to the exclusions and the ESG integration approach as a whole have certain limitations. The carbon footprint is measured by the WACI score relative to the relevant index.

        Members of Capital Group's compliance, risk management and internal audit staff conduct periodic assessments on the design and operating effectiveness of the firm’s ESG activities and key controls. Establishing dialogue with companies is an integral part of the Investment Adviser’s investment management service to clients. This enables the company to engage and generate dialogue on any issues that could affect the company’s long-term prospects, including exposures to sustainability issues.

        The Fund has not designated a reference benchmark to meet the environmental and/or social characteristics it promotes.

        No sustainable investment objective

        This Fund promotes environmental or social characteristics but does not have as its objective sustainable investment. The Fund does not make any sustainable investments.

        Environmental or social characteristics of the financial product

        The environmental and/or social characteristics promoted by the Fund are the following:

        - In addition to the integration of sustainability risks as part of the Investment Adviser’s investment decision-making process, the Fund aims to manage a carbon footprint (weighted average carbon intensity (“WACI”)) for its investments in corporate issuers that is generally at least 30% lower than the MSCI ACWI index. In managing to this constraint, the Fund is considering Principal Adverse Impact 1 on greenhouse gas emissions.

        - The Fund evaluates and applies ESG and norms-based screening to implement exclusions on corporate issuers. In applying these screens, the Fund is considering Principal Adverse Impact 4 on exposure to companies active in the fossil fuel sector, Principal Adverse Impact 10 on United Nations Global Compact violators and Principal Adverse Impact 14 on controversial weapons.

        The Investment Adviser can select investments to the extent they do not trigger a breach of the carbon target and are in line with the exclusion policy.

        There is no reference benchmark designated for the purpose of attaining the environmental or social characteristics promoted by the Fund.

        Investment strategy

        The Fund aims to manage a carbon footprint for its investment in corporate issuers that is generally at least 30% lower than the Fund’s selected index (MSCI ACWI). The selected index is representative of the investment universe of the Fund. The Investment Adviser uses the WACI as a metric to measure the Fund’s carbon footprint. In calculating the Fund’s WACI, the Investment Adviser relies on third party data provider. In the event that reported carbon emissions data is not available for a particular issuer, the third-party provider may provide estimates using their own methodologies Issuers that do not have any carbon emissions data available (reported or estimated) are excluded from the WACI calculation. Excluded from the WACI determination are cash holdings, derivatives, sovereigns and securitised products. The Investment Adviser assesses the portfolio WACI data on an ongoing basis to help the Fund remain within the target level. It is not the intention of the Investment Adviser to automatically exclude higher carbon emitters on an individual basis.

        The Fund evaluates and applies ESG and norms-based screening to implement exclusions on corporate issuers. In applying these screens, the Fund is considering Principal Adverse Impact 4 on exposure to companies active in the fossil fuel sector, Principal Adverse Impact 10 on United Nations Global Compact violators and Principal Adverse Impact 14 on controversial weapons. To support this screening, the Investment Adviser relies on third party provider(s). This allows the Investment Adviser to identify all publicly traded companies globally that are inconsistent with the applicable ESG and norms-based screens. The third-party provider supplies a profile of each company’s specific business involvement in, or the revenue which they derive from, activities that are inconsistent with the values and norms-based screens applied to the Fund.

        The Negative Screening Policy applied by the Investment Adviser can be found on:

        https://www.capitalgroup.com/content/dam/cgc/tenants/eacg/negative-screening-policy.pdf 

        The Fund promotes, among other characteristics, environmental and social characteristics, provided the companies in which investments are made follow good governance practices. Good governance practices are evaluated as part of the Investment Adviser’s ESG integration process. Such practices are assessed through a monitoring process. Where relevant, fundamental analysis of a range of governance metrics that cover areas such as auditing practices, board composition and executive compensation, among others, is also conducted. The Investment Adviser also engages in regular dialogue with companies on corporate governance issues and exercises its proxy voting rights for the entities in which the Fund invests.

        Capital Group's ESG Policy Statement provides additional detail on Capital Group’s views on specific ESG issues, including ethical conduct, disclosures and corporate governance. Information on Capital Group’s corporate governance principles can be found in its Proxy Voting Procedures and Principles as well as in the ESG Policy Statement.

        Further details can be found in the ESG Policy Statement on:

        https://www.capitalgroup.com/content/dam/cgc/tenants/eacg/esg/files/esg-policy-statement(en).pdf

        Proportion of investments

        Generally, at least 90% of the Fund's investments in transferable securities at the time of purchase are used to attain the environmental or social characteristics promoted by the Fund (being subject to the Investment Adviser’s binding Negative Screening Policy and carbon constraint), and a maximum of 10% of the Fund’s investments in transferable securities are in category “#2 Other” and so may not be used to attain the environmental or social characteristics promoted by the Fund, and therefore are not aligned.

        The Fund’s carbon constraint does not apply to the entire portfolio, and will only apply to corporate issuers that have carbon emissions data available (reported or estimated). Cash holdings are also not considered in scope of the carbon constraint.

        The Fund's Negative Screening Policy will apply to the entire portfolio, with the exception of cash holdings.

        The planned asset allocation is monitored continuously and evaluated on a yearly basis.

        Monitoring of environmental or social characteristics

        The sustainability indicators used by the Fund to measure the attainment of each of the environmental or social characteristics it promotes are the following:

        - Carbon constraint; and

        - Negative Screening Policy.

        To measure the attainment of the environmental and/or social characteristics promoted, the Fund considers the following principal adverse impacts (PAIs) on sustainability factors:

        - Principal Adverse Impact 1 on greenhouse gas emissions.

        - Principal Adverse Impact 4 on exposure to companies active in the fossil fuel sector.

        - Principal Adverse Impact 10 on United Nations Global Compact violators.

        - Principal Adverse Impact 14 on controversial weapons.

        The Fund applies investment restrictions rules on a pre-trade basis in portfolio management systems to prohibit investment in companies or issuers based on the exclusion criteria. The portfolio also undergoes regular/systematic post-trade compliance checks.

        To support this screening, the Investment Adviser relies on third party provider(s). This allows the Investment Adviser to identify all publicly traded companies globally that are inconsistent with the applicable ESG and norms-based screens. The third-party provider supplies a profile of each company’s specific business involvement in, or the revenue which they derive from, activities that are inconsistent with the values and norms-based screens applied to the Fund.

        Exclusions for corporate issuers are primarily identified through third party provider(s).

        In the event that exclusions cannot be verified through the third-party provider(s), the Investment Adviser will aim to identify business involvement activities through its own assessment. Please refer to Fund’s Negative Screening Policy for further details.

        If the portfolio was in danger of breaching the target, holdings would be adjusted to increase the margin between the portfolio carbon footprint and target level; exposure to selected higher emitters would be reduced with increased exposure to lower emitters, while ensuring the Fund’s investment objective is maintained. Compliance checks are in place to facilitate this and mitigate the risk of any breach, for example as the result of market movement. Carbon footprint reports use MSCI Carbon Footprint Metrics data.

        Methodologies

        The Fund implements two binding ESG-related criteria: sector- and norms-based screens in the form of exclusions and a carbon footprint target. The exclusions are available here and the carbon footprint target is detailed in section “Investment Strategy”.

        The SFDR classification is related to the European Union’s regulation and is not equivalent to approval or recognition as an ESG Fund by regulators in Asia Pacific.

        The negative screens and carbon footprint align to the four PAIs listed above.

        Data sources and processing

        Exclusions are primarily identified through a third-party provider, MSCI ESG Business Involvement Screening Research (“MSCI ESG”). Other data points include the MSCI United Nations Global Compact violators and MSCI Carbon Footprint Metrics.

        Capital Group periodically reviews the quality of the service provider organisations’ performance and conducts ongoing monitoring and due diligence activities commensurate with the significance of the services provided.

        The Fund’s Negative Screening Policy applied can be found on:

        https://www.capitalgroup.com/content/dam/cgc/tenants/eacg/negative-screening-policy.pdf

        Limitations to methodologies and data

        The methodology and sources relating to the exclusions and the ESG integration approach as a whole have certain limitations. In order to identify all publicly traded companies globally which are involved in activities such as the production of controversial products and revenue derived from activities that are inconsistent with the ESG and norms-based screens, the Fund uses data from third-party provider(s). In the event that data cannot be obtained through third-party providers or if the Investment Adviser believes that third-party data and/or assessment is incomplete or inaccurate, the Investment Adviser will aim to identify business involvement activities through its own assessment (including by using other third-party data sources). 

        Due diligence

        Members of Capital Group's compliance, risk management and internal audit staff conduct periodic assessments on the design and operating effectiveness of the firm’s ESG activities and key controls. This includes compliance with internal processes and procedures as well as with the regulatory landscape in the jurisdictions in which the company operates. Capital Group meets regularly with the third-party data providers to review the quality of the services provided.

        Pre-trade and post-trade checks are also in place as further explained in section “Monitoring of environmental or social characteristics” above.

        Engagement policies

        Establishing dialogue with companies is an integral part of the Investment Adviser’s investment management service to clients. Capital Group’s investment teams meet on a regular basis with company management, including executive and non-executive directors, chairs and finance directors. This enables the company to engage and generate dialogue on any issues that could affect the company’s long-term prospects, including exposures to sustainability issues.

        Where Capital Group's investment teams identify an issue material to the long-term value of a company or they are concerned about relative ESG performance, Capital Group's investment professionals and governance teams will engage with management. Management’s response and the steps they take to minimise any associated risks, forms an important part of Capital Group's assessment of management quality, which itself is a key factor in the stock selection decisions.

        Designated reference benchmark

        The Fund has not designated a reference benchmark to meet the environmental and/or social characteristics it promotes.

        The information in relation to the index is provided for context and illustration only. The fund is an actively managed UCITS. It is not managed in reference to a benchmark.

        Past results are not a guide to future results